Terrorists trading on bourses: NSA

TNN|

Feb 15, 2007, 04.30 AM IST

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NEW DELHI: Terrorists are not only getting tech-friendly but market-savvy as well. A good part of terror funds is being sourced from manipulation of the bourses, particularly the Mumbai and Chennai stock exchanges, through fictitious or notional companies, according to national security adviser M K Narayanan.

The NSA, who made this revelation during his address to the 43rd conference on security policy held last week in Munich, said many of the fictitious companies found to be engaging in stock market operations were traced to terrorist groups.

"Isolated instances of terrorist outfits manipulating the stock markets to raise funds for their operations have been reported. Stock exchanges in Mumbai and Chennai have, on occasions, reported that fictitious or notional companies were engaging in stock market operations," news agencies here quoted Mr Narayanan as having told his counterparts in Munich.

Also expressing deep concern at the transfer of terror funds through valid banking channels from Dubai and UAE for use by groups like Jaish e Mohammad and Hizbul Mujahideen, Mr Narayanan stressed on the need to lift banking secrecy and the corporate veil to facilitate proper investigation of terror-related cases.

Terrorist groups, he said, generally make small transactions to avoid detection. "Use of both real and fraudulent ATM cards has also been resorted to at times," he added. "Security agencies have detected many instances of funds received via banking channels from so-called safe locations like Dubai and UAE that were intended for terrorist groups," he noted.

Squarely blaming certain "official agencies" in Pakistan for pumping millions of dollars for militancy in India, he said jehadi groups had started to establish a network of legitimate businesses to fund their activities. The terrorist groups are involved in legally running restaurants, real estate agencies and shipping firms and use their proceeds for their terrorist activities.

"Among terrorist outfits," said Mr Narayanan, "the LTTE has a very well-established network of legitimate business, which provides both funds as well as logistics for their activities. Jehadi terrorist organisations have begun to follow suit."

He said a combination of conventional money laundering techniques, including routing money through hawala channels, has made it extremely difficult to track funds utilised for terrorist purposes since no audit or paper trail is available.

Referring to 11 common ways of terrorist funding, the NSA said among them were voluntary contributions, on which terrorist groups like Al Qaeda and LTTE thrive, and compulsory donations including forcible subscription to their publications.

"A tentative estimate of funds made available to such terrorist outfits annually is in the region of a few million dollars," he said. According to Mr Narayanan, the jehadi and non-jehadi groups often tie up with organised criminal syndicates for fund-raising through kidnappings and bank robberies.

Counterfeiting of currency is another method adopted (by agencies across the border) to fund terrorist activities directed against India, with Nepal and Bangladesh being the twin routes.